Poor Profits, No Investment Equals Downgraded Service

Part 3 - The Airport’s View

The Cargo Industry Needs a New Code of Conduct

In our last part of this series we present an airport’s position on poor profits that induce investment weakness, leading to downgraded services.
The setting up of new rules is advocated by Felix Kreutel, Senior Vice President Cargo at airport operator Fraport AG. The reason for his testimony is the avalanche of problems cargo actors are facing in Frankfurt, be it in trucking, the timely delivery or pick-up of goods at freight terminals or the huge backlog of shipments at the ground handler’s warehouses. The crisis is there. And a remedy, too, but it cannot cure every ill.

Felix Kreutel has become Senior VP Cargo at operator Fraport AG last October  -  picture: hs
Felix Kreutel has become Senior VP Cargo at operator Fraport AG last October - picture: hs

Truck drivers on way to Frankfurt Airport, having their vehicles packed with shipments, need a lot of patience these days. Forwarders speak of an untenable situation caused by congested freight terminals and backlogs of consignments. Shipments that missed their booked flight, including expensive express products, are no exception any more but have become standard. In short: the cargo industry is facing tsunami-like problems at Frankfurt Airport.

Not me, it’s the others!
But who is to blame? Each actor points his finger at someone else. It’s not us, says manager Felix Kreutel of Fraport. His argument: The operator leases its on-airport located facilities and premises to forwarding agents, handlers or airlines, but is not directly involved in the daily cargo business.
Carriers accuse their local handling agents of ill performing and blame them for managing their human resources poorly.
Handlers retaliate, pointing out that freight airlines pay way too little for the many services they provide, resulting in low wages and manpower shortage.
Finally, truckers see themselves in the role of victims, suffering under excessive waiting times caused by uncoordinated supply and transport chains to and from the large Rhine-Main Airport.  


Fraport must take the first step
The good news is that all parties involved have recognized that single actions won’t remedy the many shortcomings. Instead, root-and-branch reforms are needed. But where to start and who assumes the role of coordinator? Even if Fraport doesn’t raise its hand, the operator has a high responsibility to ensure that things turn from bad to better. This simply because the airport management must do their utmost to preserve the still positive reputation of Rhine-Main as efficient cargo site.

Handling problems are mounting at FRA’s Cargo City South  -  picture: Fraport
Handling problems are mounting at FRA’s Cargo City South - picture: Fraport

You only get what you pay for
When asking manager Kreutel about his vision to eliminate FRA’s deficits in cargo throughput he points first and foremost at the airlines. “They demand quality from their ground handlers. But quality costs money.”
In this context, Felix recalls the current rate situation, benefitting cargo carriers exceptionally. “But what happens? Airlines keep their excessive profits for themselves, not paying a single cent more to their ground handlers,” he criticizes.
Being cut off from adequate funds, handling agents are not able to hire qualified personnel. “The labor market in and around Frankfurt is practically void, so finding suitable candidates working for little pay is an almost hopeless situation.” Felix’s conclusion: Investments are only possible if enterprises are financially healthy. Or else, they cannot invest in digitalization, modern equipment or qualified staff, thus closing the vicious circle.

Players should view the larger picture
The fundamental evil is that each participant in the supply chain only focusses on his own objectives, this way losing sight of the whole picture. That’s why “our industry needs a new code of conduct,” setting clear standards, eliminating stand-alone and individual solutions, propagates Herr Kreutel. “For instance, we need a binding slot management system, defining financial or other penalties if a truck doesn’t arrive in time, missing his allocated slot at a given cargo terminal.” He adds to this that alike proposals to better manage the cargo flows at Rhine-Main cannot be defined by Fraport per order di Mufti. Instead, they can only be moderated by the operator in direct exchange of views with forwarding agents, airlines, handlers and others. 

Fraport’s ferryboat vision
The entire process from the departure of a cargo truck to the arrival of the vehicle at the ground handler’s warehouse must be redefined and fine-tuned. “It should work similarly to booking a ticket for a scheduled departure of a ferryboat,” Kreutel illustrates.
An adequate tool is in place: Fair@Link, a tailored electronic communication system developed by Hamburg-based software provider Dakosy, enabling handling agents, freight forwarders, truckers and airlines to optimize their freight flows. However, even the most sophisticated electronic messaging system cannot eliminate labor bottlenecks or motivate people to become truck drivers.
Currently, there is a shortage of 45,000 professional drivers in Germany.

Heiner Siegmund

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